Oil continues downhill to a 5 years low in NY and London

Oil prices in New York again fell hard on Friday, a minimum of five and a half years after a cut demand forecasts by the International Energy Agency (IEA).

A barrel of “light sweet crude” (WTI) for January delivery fell $ 2.14 on the New York Mercantile Exchange (Nymex) at $ 57.81, its lowest closing level since May 2009.

In London, Brent crude for January delivery also ended lower, at $ 61.76 on the Intercontinental Exchange (ICE), a new low since July 2009.

From mid-June WTI lost almost half (46%) of its value. “Clearly, the new price drop is linked to the IEA report,” said Phil Flynn of Price Futures Group. “This scenario that pushes prices down it adds to an already very difficult for the global oil market period,” he added.

In its monthly report, the IEA cut its growth forecasts for oil demand for 2015 to 93,300,000 barrels, compared with a previous estimate of 93.6 million barrels a day, which is due to a slower recovery than expected global growth next year. The context is oversupply of crude.

“The IEA notes that the fall in prices in the short term could affect demand in growth markets such as Russia, or there where falling oil prices creates the conditions for a recession,” said Tim Evans of Citi .

“We can clearly still doubt that prices reach a floor,” he said.

On Thursday OPEC had lowered estimates of global oil consumption after late November decided to keep its production ceiling at 30 million barrels.

“The fall in oil prices is freezing more and more projects,” said Phil Flynn. “The number of wells in the US (posted by oil services firm Baker Hughes) recorded its biggest drop” in years, he added.